Lament of the Plutocrats

On a recent afternoon, executives at Goldman Sachs invited a few hundred major investors to the Conrad Hotel in lower Manhattan. The bankers and their guests filed into a large room and turned their eyes to Hillary Clinton.

Most Popular

Ordinarily these masters of the universe might have groaned at the idea of a politician taking the microphone. In the contentious years since the crash of 2008, they’ve grown wearily accustomed to being called names—labeled “fat cats" by President Obama and worse by those on the left—and gotten used to being largely shunned by Tea Party Republicans for their association with the Washington establishment. And of course there are all those infuriating new rules and regulations, culminating this week with the imposition of the so-called Volcker Rule to make risky trades by big banks illegal.

But Clinton offered a message that the collected plutocrats found reassuring, according to accounts offered by several attendees, declaring that the banker-bashing so popular within both political parties was unproductive and indeed foolish. Striking a soothing note on the global financial crisis, she told the audience, in effect: We all got into this mess together, and we’re all going to have to work together to get out of it. What the bankers heard her to say was just what they would hope for from a prospective presidential candidate: Beating up the finance industry isn’t going to improve the economy—it needs to stop. And indeed Goldman’s Tim O’Neill, who heads the bank’s asset management business, introduced Clinton by saying how courageous she was for speaking at the bank. (Brave, perhaps, but also well-compensated: Clinton’s minimum fee for paid remarks is $200,000).

Certainly, Clinton offered the money men—and, yes, they are mostly men—at Goldman’s HQ a bit of a morale boost. “It was like, ‘Here’s someone who doesn’t want to vilify us but wants to get business back in the game,’” said an attendee. “Like, maybe here’s someone who can lead us out of the wilderness.”

Clinton’s remarks were hardly a sweeping absolution for the sins of Wall Street, whose leaders she courted assiduously for financial support over a decade, as a senator and a presidential candidate in 2008. But they did register as a repudiation of some of the angry anti-Wall Street rhetoric emanating from liberals rallying behind the likes of Sens. Elizabeth Warren (D-Mass.) and Sherrod Brown (D-Ohio). And perhaps even more than that, Clinton’s presence offered a glimpse to a future in which Wall Street might repair its frayed political relationships.

At both ends of the political spectrum, the titans of American finance today find themselves alienated from politics to a surprising degree. On the left, the rift has been precipitated by populist outrage and a damaged, difficult relationship with the White House. The discord and disappointment has simmered for years and is now boiling toward the surface on both sides, particularly for donors who felt burned and spurned by a White House they helped to elect. To understand just how far apart the president and the barons of Wall Street have drifted, consider that as a young senator in his first run for the presidency, Barack Obama took in $16 million from Wall Street donors, while last year, as the incumbent president, he was able to muster only $6 million.

The Money Men to Watch

The fundraisers who are starting to circle their preferred 2016 presidential hopefuls are doing so tentatively—just beginning the ritual dance between candidate and benefactor that will shape the financial race for the White House. With presidential contenders looking to collect north of a billion dollars, here are check-writers on the Republican side that could soon matter most. (See the next page for their Democratic counterparts.)

REPUBLICANS

Cliff Asness Co-founder, AQR Capital
Asness was strongly behind Obama in 2008 but split with the president early in 2009 over a dispute related to the auto industry bailout. He backed Mitt Romney in 2012 and, as someone who's given to Democrats in the past, will be a bellwether for Democrats' abilities to win back Wall Street in 2016.

Henry Kravis Co-founder, Kohlberg Kravis & Roberts & Co.
The private equity titan founded (along with Lewis Eisenberg) the Republican Leadership Council in 1997 and has been a major GOP bundler for decades. An elder statesman in finance and among the Republican donor class, he is always a sign of where Wall Street is placing its political bets.

Patrick Durkin Managing director, BarclaysCapital
Durkin was among the well-heeled attendees at a Republican National Committee cattle call with potential candidates at Jets owner Woody Johnson's home in September. His name often appears as a co-host on major donor events in New York City. And he'll send an early establishment signal when he settles on his candidate for 2016.

Doug KornSenior managing director, Irving Place Capital
Korn hosted an event for Rudy Giuliani at his Connecticut home in 2007, and he played a major role for Romney last cycle. He'll remain in the Republican lane next time around, but whom he backs is still an open question.

Ken Langone Co-founder, Home Depot
A member of the business-minded club that backed Giuliani in 2008, Langone was slow to back Romney in 2012. He tried repeatedly to get Chris Christie to run instead, and he is already firmly behind the New Jersey governor if he runs in 2016.

Lew Eisenberg Senior adviser, Kohlberg Kravis & Roberts & Co.
A veteran of the George W. Bush fundraising network, Eisenberg supported John McCain in 2008 and then Mitt Romney early in 2012. He’s also been among the Republicans who’ve been involved in efforts to change his party’s views on gay marriage.

Cliff SobelManaging partner, Valor Capital Group
The former ambassador to Brazil under Bush has deep experience as a major check-raker for the GOP. He was a key asset to Romney in 2012 and is already cozying up to Christie for 2016, hosting an event for the governor in the Hamptons.

Paul Singer CEO, Elliott Associates
Singer has risen quickly to prominence in GOP circles in the last several years. He backed Giuliani in 2008 but departed the campaign when it became clear the former New York City mayor was a weak investment. Singer was among the last major names to join Romney. And he's among the most-watched GOP bundlers in the New York donor class.

Meanwhile, on the right, the estrangement owes to the failures of GOP candidate Mitt Romney’s presidential campaign—a loss that has prompted Wall Street donors to sit on their cash and question the return that their investments in Republican politics can generate, especially with the GOP’s post-defeat lurch toward the Tea Party populists and outsider activists. “The ground is shifting beneath their feet,” says one top Republican donor—even if not all the Wall Streeters have come to terms with a world where their money might matter less than the deep pockets and cause-driven giving by Republican benefactors like casino magnate Sheldon Adelson, who has proved willing to write checks north of $100 million.

This is not the first time Wall Street has found itself at odds with one of the political parties in Washington. But it may be the first time since the Great Depression that the New York banker class has been this disconnected from both parties simultaneously. The pervasive dismay, alienation and hopelessness comes through in recent conversations with CEOs, hedge fund managers and private equity officials—all of them major Wall Street donors who’ve seen their influence in Washington tested and who are now uncertain whether and how to re-engage. “Like the rest of America, Wall Street is looking at Washington and saying whether we agree or disagree, they’re looking at both parties with complete revulsion,” one private equity executive told us.

The strained relations come at a consequential moment for the financial industry, which has rebounded from the 2008 financial crash faster and with bigger gains than the rest of the country, but is now facing the ire of newly emboldened and decidedly anti-Wall Street populists in both political parties. And yet the 2014 and 2016 election cycles will help determine whether banks, already restrained by the Dodd-Frank financial reform law, will face new regulatory restrictions, further rounds of legal action and higher tax rates. “Traditionally, Wall Street plays both sides of the fence on its political donations,” says Charles Geisst, a financial historian and professor at Manhattan College. “What's happening now is neither side is coming through with the things Wall Street feels it is entitled to, and so everybody just wants to give up. But they can’t, because they are going to continue to be in the limelight whether they like it or not.”

***

To say Wall Street’s initial rosy expectations for its relationship with Barack Obama were dashed would be an understatement. Finance executives—a donor demographic traditionally loaded with Republicans who factored heavily in propelling George W. Bush into the White House—gave Obama twice as much financial support in 2008 as they did his opponent, GOP Sen. John McCain. Obama established his prowess as a Wall Street fundraiser early in his battle for the Democratic nomination against the well-connected Clinton by cementing a relationship with Blair Effron, a young banker who bundled more than $200,000 for Obama. Effron was first invited into the Obama donor fold by the legendary investor and Democratic philanthropist George Soros in December 2006, when then-Senator Obama was on the verge of launching a presidential campaign.

Obama also secured help from investment executives who had not previously been a part of the Democratic money world—supporters like Mark Gallogly, the founder of the private equity firm Centerbridge Partners who inspired a slew of other new donors (“They all saw themselves in [Gallogly],” recalls a Democratic source involved in Obama’s fundraising efforts). Other backers had tough choices to make. For instance, Orin Kramer, the hedge fund manager and head of Boston Providence, had long-established ties to the Clintons. But he went with Obama instead.